Decision making is a problem for organisations
A 2004-2005 Teradata Report on Enterprise Decision-Making showed that over 70% of their survey respondents said that poor decision-making is a serious problem. Other research in the UK conducted by the research agency YouGov for Investors in People highlighted the negative impact of poor decision-making on employees.
The research in the area of organizational performance is consistent. With about half of all decisions failing in some way. Specifically that the outcomes of the decision making process was poor. Perhaps we made the ‘wrong’ choice or simply never implemented it. It seems obvious that if decisions can fail for up to half of the time then organizations need to pay very close attention to the quality of their decisions and the people carrying out this role. But to-date, there is not much evidence that they are.
Decision-making is an age old problem that is being aggravated by increasing knowledge, complexity and the speed of change. The number of decisions we have to make is increasing as is the pace of change. And is made more complex as the number of people involved in the thousands of day-to-day decisions increases. From from a new product launch to a decision on a new hire. Decision-making is an essential requirement of management especially at the senior level and is perhaps the true core competence of leaders. ‘Our society has largely neglected the fact that sound judgment and decision making are the crux of many professions’ (Smith et al 2004).
The best decision-makers can think on their feet
The very best leaders appear able to make crucial decisions effortlessly ‘standing on their feet’ drawing on unseen resources of domain knowledge and experience that set them apart from the crowd. How effective managers and staff are at making good choices, and understanding the process of high performance decision making, is becoming critical to organizational success.
Problem-solving and decision-making are closely linked as each require creativity in identifying then evaluating options. We have to choose a course of action from the available options. We should note a problem always implies there are options. If there is a known solution then we have a puzzle not a problem.
A decision is basically a problem solving process under uncertainty. This means the steps or stages of decision making are more or less the same as those for problem solving. There are many n-step problem solving routines but at the heart are the following three main aspects:
- How we see the problem;
- What alternative solutions are there;
- And how we can take action on the decision afterwards.
The three key aspects of high level decision-making:
- Proactive cognition is a feature of people who actively seek to change the environment and not passively react to it. People strong in this feature scan for opportunities in the world preferring to make choices rather than follow procedures. They create novel options by seeing problems differently rather than considering just the obvious.
- Deciding is about making the decision, weighing and chewing over the options and above all considering the risk of alternatives. People who are high in this ability often draw on extensive domain knowledge and experience. This enables them to make mental short cuts and come to a decision quickly.
- Finally Action Control – making and enacting the choice. The effective planning and scheduling of actions to deliver the decision are examples of behaviour of effective decision-makers. They ensure that decisions are not postponed and we avoid procrastination and are implemented without delay.
A good decision-making process gets to the goal
We make good decisions directly as a result of clear criteria, knowing the scope of the choice together with the risk of each alternative. Then we can take action. From this perspective a good decision is the outcome of a process of achieving a given objective from a certain starting point. A good decision is a logical one (or at least defensible and traceable) based on the available knowledge that answers a particular organizational problem. Measuring whether or not decision making is good or bad needs to assess both the process and the outcome. The effectiveness of the process and the quality of the decision making are two quite distinct things.
Effectiveness is how well we manage the process of decision making and how learning takes place. What caused a poor outcome to occur is always fed back into the process. Output quality is to some extent comes well after we made the decision. And is a reflection whether we made the right choice as well as how well the we implemented the decision. There are many examples, particularly in the political world, where it is assumed that the announcement is the same as the implementation.
A good decision making process therefore integrates the choice with the implementation. Then looks at the outcome to ensure learning takes place for the next time.
A balanced process works best
It is this latter point that completes the circle. It is a balanced decision making process that seems to be about right. Consciously attending to all three areas of the decision making process is key. The seeking of ways to control and act on the world, weighing up options carefully thinking about the choice. Then ensuring implementation takes place are the three key facets of effective decision making. And is a feature of high performers. When we have this balanced process the poor performance we see in this core area be improved.
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